Dubai’s financial regulator has fined two Abraaj companies a total of almost $315m for misleading investors and misusing their money ahead of the private equity firm’s collapse last year.

The Dubai Financial Services Authority announced the penalties on Tuesday as it revealed the first findings of its probe into the Abraaj scandal, which was formally launched in March 2018.

“We will continue our investigation and pursue all relevant inquiries,” said Bryan Stirewalt, DFSA chief executive. “Those guilty of wrongdoing will be brought to account.”

Abraaj started to unwind in early 2018 when it emerged that investors in the firm’s $1bn emerging markets healthcare fund, including the Bill & Melinda Gates Foundation, had complained about misuse of their money. As trust evaporated, the indebted firm collapsed amid creditor pressure to wind up the company. Abraaj applied for provisional liquidation in the Cayman Islands in June last year.

Because of these activities, two funds managed by Aiml had a combined shortfall of at least $180m at the time of its collapse, the DFSA said. The fine is based on a multiple of that shortfall, based on the seriousness of the wrongdoing.

Abraaj Capital Limited, a DIFC-based firm licensed by the DFSA, was fined $15m for not keeping adequate capital and deceiving the regulator.

The DIFC, regulated by the DFSA, is the base for many of the world’s leading banks, asset managers and law firms to service the oil-rich Gulf states. Recommended The Big Read Private equity: inside the fall of Abraaj

The collapse of Abraaj, at its peak one of the largest emerging markets investors, has sent shockwaves through the region’s financial industry, sparking a global scramble among creditors to recover money from the indebted firm.

The DFSA’s action comes after US prosecutors this year indicted Abraaj founder Arif Naqvi and other senior executives on charges of defrauding investors.

The US has claimed that as Abraaj’s finances deteriorated, Mr Naqvi instructed staff to use cash from investor funds and delay distributions to cover payroll and debt financing costs. The prosecution also alleges that Mr Naqvi personally misappropriated more than $250m.

Mr Naqvi, who has denied the charges and said he expects to be cleared, is under house arrest in London on £15m bail, pending extradition hearings to the US.

The other senior executives have denied wrongdoing, except for former managing partner Mustafa Abdel-Wadood, who has pleaded guilty to charges in New York.

The DFSA rejected claims that its investigation had come too late and, been insufficient to safeguard the regulatory environment and damaged the DIFC’s reputation.

Mr Stirewalt said the “highly complex” investigation involved multiple lines of inquiry, the review of huge banks of electronic data and bank records, and a large number of interviews. He added that Abraaj’s senior management had gone to great lengths to hide wrongdoing, underlining that the firm’s shortcomings did not reflect any broader problems in the sector or in the Gulf.

“This is one firm, it is not an indictment of private equity or the region,” he said. “We are taking decisive action and will continue to investigate the individuals involved.”

He said other firms in the DIFC had responded to the Abraaj scandal by investing in financial controls to strengthen their activities.

The firm’s fall from grace has been painful for the DIFC. Abraaj, which boasted of managing $14bn in assets, was a shining example of homegrown success, developing in tandem with the DIFC since they were both founded in 2002 and encapsulating the city’s rise from trading hub to global financial centre.

Efforts to restructure Abraaj, which has debts of roughly $1bn, have been hampered by delays to asset sales amid litigation against the firm’s senior management.

Before enforcing the fines, the DFSA said it would take the firm’s circumstances and the implications for fund investors into consideration.

Other private equity firms have moved to take over the management of some of Abraaj’s funds.

Actis of the UK has taken over Abraaj’s fourth buyout fund and an African fund, while US firms TPG and Colony Capital have respectively assumed management of its $1bn healthcare fund and its Latin American fund.